CORPORATE GOVERNANCE LEGISLATION ASSESSMENT PROJECT

Transcription

1 CORPORATE GOVERNANCE LEGISLATION ASSESSMENT PROJECT 2007 ASSESSMENT based on legislation in force on 1 November 2007 POLAND CMS CAMERON MC KENNA DARIUSZ GRESZTA SPÓŁKA KOMANDYTOWA Warsaw Financial Center 53 Emilii Plater str Warsaw Poland

2 TABLE OF CONTENTS Definitions Overall Country Information Principle I: Ensuring the basis for an effective corporate governance framework Principle II: The rights of shareholders Principle III: The equitable treatment of shareholders Principle IV: The role of stakeholders in corporate governance Principle V: Disclosure and Transparency Principle VI: The Responsibilities of the Board

3 Definitions Definition Official Title of Law/Regulation or the name of the institution (in English) AA Act on accounting, dated 29 September 1994 (Journal of Laws of 2002, No. 76, item 694). AB Act on bonds, dated 29 June 1995 (Journal of Laws of 2001, No. 120, item 1300). ACMS Act on capital market supervision, dated 29 July 2005 (Journal of Laws of 2005, No. 184, item 1537). ACP Act on Commercialisation and Privatisation, dated 30 August 1996 (Journal of Laws of 2002, No. 171, item 1397). AEC Act on European Company, dated 4 March 2005 (Journal of Laws of 2005, No. 62, item 551). AFMS Act on financial market supervision, dated 21 July 2006 (Journal of Laws of 2006, No. 157, item 1119). AIF Act on Investment funds, dated 27 Mai 2004 (Journal of Laws of 2004, No. 146, item 1546). AL Anti-Monopoly Law, dated 16 February 2007 (Journal of Laws of 2007, No. 50, item 331). AMO AMO Chairman Anti-Monopoly Office. Chairman of the Anti-Monopoly Office. ANCR Act on National Court Register, dated 20 August 1997 (Journal of Laws of 2007, No. 168, item 1186). APC Administrative Procedure Code, dated 14 July 1960 (Journal of Laws of 2000, No. 98, item 1071). APNA Act on Publishing Normative Acts and Other Legal Acts, dated 20 July 2000 (Journal of Laws of 2007, No. 68, item 449). APO ARP Act on public offering, conditions governing the introduction of financial instruments to organised trading, and public companies, dated 29 July 2005 (Journal of Laws of 2005, No. 184, item 1539). Act on Remuneration of Persons Managing Particular Legal Entities, dated 3 March 200 (Journal of Laws of 2000, No. 26, item 306). ASB Act on State Budget, dated 25 January 2007 (Journal of Laws of 2007 No. 15 item 90). ATFI Act on trading in financial instruments, dated 29 July 2005 (Journal of Laws of 2005, No.183, item. 1538). BL Banking Law, dated 29 August 1997 (Journal of Laws of 2002, No. 72, item 665). BSA CC Banking Supervisory Authority. Civil Code, dated 23 April 1964 (Journal of Laws of 1964, No. 16, item 93, as amended). CCC Commercial Companies Code, dated 15 September 2000 (Journal of Laws of 2000, No. 94, item 1037). CPC Civil Procedure Code, dated 17 November 1964 (Journal of Laws of 1964, No. 43, item 296). CPL Chairman of Council of Ministers Regulation on Principles of Legislation, dated 20 June 2002 (Journal of Laws of 2002, No. 100, item 908)

4 Definition Official Title of Law/Regulation or the name of the institution (in English) GP 2008 Good Practices for Polish Listed Companies, adopted by the WSE resolution on 4 July IAP IFRS International Accounting Principles. International Financial Reporting Standards. IL Insolvency Law, dated 28 February 2003 (Journal of Laws of 2003, No. 60, No. 535). LC Labour Code, dated 26 June 1974 (Journal of Laws of 1998, No. 21, item 94). LEO Law on entrepreneurs' obligations with regard to administration of waste, product fee and deposit fee dated 11 May 2001 (Journal of Laws of 2007, No. 90, item 607). LPP Law on the packaging and packaging waste dated 11 May 2001 (Journal of Laws of 2001, No. 63, item 638). LW Law on Waste, dated 27 April 2001 (Journal of Laws of 2007, no. 39, item 251). NDS PFSA PFSA Chairman RIPIS SEC National Depository for Securities S.A. Polish Financial Supervision Authority. Chairman of Polish Financial Supervision Authority. Ministry of Finance regulation on current and periodic information to be published by issuers of securities, dated 19 October 2005 (Journal of Laws of 2005, No. 209, item 1744). Securities and Exchange Commission. WL Water law dated 18 July 2001 (Journal of Laws of 2005, No. 239, item 2019). WSE WSE By-laws WSE Statutes Warsaw Stock Exchange S.A. Warsaw Stock Exchange By-laws passed on by the resolution of the Warsaw Stock Exchange Council dated 4 January 2006 (as amended). Warsaw Stock Exchange Statutes

5 Overall Country Information No. Checklist Brief description What is the level of dialogue (e.g. conferences, working groups) between the Government (including governmental bodies or other authorities such as Securities Commissions) and the private sector in respect to the need to improve corporate governance in your country? Please describe any ongoing process(es) to improve the level of corporate governance in your country? Which bodies in the public and private sectors (both domestic and foreign) have initiated, supported and been active in promoting corporate governance reform? (For example, institutes of directors, centers/institutes of corporate governance, associations of shareholders, chambers of commerce, or IFIs). Does a voluntary national code of corporate governance good practice exist? [If yes, please specify the date of enactment, the latest amendments and if it is available on the web and include the link.] The Government is generally supportive about the need to improve corporate governance in Poland. However, due to the recent Parliamentary elections, this has not been a top priority. On the other hand, given that 2007 was a year of quick economic growth in Poland and rapid growth of the WSE, focus and attention on corporate scandals was generally scarce. In certain cases the Government (one particular example is the PFSA see below) engages in wide dialogue with the investor/capital markets community. There are corporate governance codes for specific types of companies prepared by private sector. Private institutions (see below question 3) organise conferences and working seminars on corporate governance matters. The Institute of Directors issue the Corporate Governance Review quarterly. The process of improving the level of corporate governance is based mainly on private initiatives. The corporate governance codes are prepared out of private initiative (also of the WSE) and voluntarily enacted by the market participants and the Government is generally eager to implement any EU initiatives in this field. However, at present, the PFSA is eagerly leading the process of drafting and introducing a "Best Practices for the Financial Sector" code, which is widely consulted with the investor/capital markets community. There are several private institutions and working groups that work on corporate governance reform. The most active are the following: (i) Polish Corporate Governance Forum (please see (ii) Corporate Governance Forum of Institute of Directors (please see (iii) C-law.org Center (please see (iv) Polish Private Equity Association (please see (v) The Gdańsk Institute for Market Economics (please see (vi) Polish Association of Investment Professionals (please see From Government bodies, the PFSA is currently also active in this field (see above). There is no unified national corporate governance code. Different codes exist for institutional investors and for listed companies. The Chamber of Managers of Funds and Assets and Trade Chamber of Pensions Associations established the CG Code for institutional investors in October It is in the stage of being implemented by relevant institutional investors. The Chamber of Brokerage Houses established the Code of Good Practise for Brokerage Houses - 5 -

6 No. Checklist Brief description If the code exists: a.) was the voluntary code of corporate governance developed by the Government or the private sector? b.) to what extent is the code based on the OECD Principles? c.) is it endorsed by the stock exchange or securities commission? d.) e.) must companies/listed companies disclose their degree of compliance with the code ( comply or explain )? are compliance statements published and easily accessible by investors? [If yes, please describe. Include, if available, the website where the compliance statements can be found.] (please see Due to its availability to all companies listed on the WSE, the most important and most widely used id the code for listed companies. Its first version (GP 2002) was prepared by the Good Practices Committee of Corporate Governance Forum in 2002 and enacted by the WSE on 4 September The second version (GP 2005) came into force on 1 January On 4 July 2007 the WSE enacted GP 2008 that comes into force on 1 January The English versions of the GP codes may be obtained from: (i) GP 2002 ; (ii) GP 2005; (iii) GP All versions in Polish are available at All of the abovementioned codes were developed by the private sector. The WSE was particularly engaged in developing the corporate governance codes for listed companies (all GP codes). Corporate governance code of individual investors refers in its content to OECD rules I, II, III, V and VI. GP 2008 refers to OECD rules I, II, III, V and VI, however, concentrating mainly on rights and obligations concerning access to information in listed companies. GP 2008 became a part of the WSE rules by force of WSE Council resolution dated 4 July The previous versions of GP were part of the WSE rules as well. Yes. Under the current version of GP (2005), listed companies should fill a table on their compliance with GP, which is then published on the WSE webpage. Starting from 1 January 2008, the listed companies will prepare annual descriptive reports on their compliance with GP 2008, to be published on their webpage. The compliance statements are published on the WSE webpage ( Starting from 1 January 2008, the statements will be published on the webpage of the relevant company. It is not clear yet whether a parallel publication on WSE webpage will be required. To what extent has the Government announced plans for updating and strengthening of: Both the previous and current Governments have expressed their general (if not political) interest in strengthening the legal and court systems. Strengthening of the court system in particular has a.) the legal and court system been on the Government s agenda for the last few years, with some visible results. Due to recent Parliamentary elections, there are no particular announcements that would yet be confirmed by the new Government

7 No. Checklist Brief description b.) c.) d.) the corporate tax system the educational system for business and legal professions the application of international accounting and auditing standards? Which are the main laws and regulations addressing corporate governance in your country? [Please list titles and dates when they came into force.] Summarize recent significant legal developments affecting corporate governance. [Please indicate whether reviews are planned (and if so, where they stand in the legislative process). If reforms are pending, please provide a schedule of the main proposals which are relevant to corporate governance.] Please list the different corporate forms which are allowed under the law (e.g. partnerships, limited liability, joint stock, public limited) and briefly explain the main differences. The Polish tax system is generally messy and complicated. Both, the previous Governments and the new Government have expressed general political intentions of simplifying it, however, as yet with no visible results. Recently, general plans for updating the VAT law have been announced. Outside universities, educational systems for the business professions are mostly organized by those professions (e.g. accountants, real-estate agents, etc.). While on-going education for the legal profession has also been in the hands of the particular bars, the Government is now considering a reform of the way the legal profession will be regulated in the future. Detailed plans have not yet been announced. The Government has enacted legislation and opened centres for education of court judges. The process of implementation of IFRS is in progress. At the moment, IFRS are obligatory for consolidated financial reports by listed companies and by banks. As for separate reports, IFRS may be applied by: listed companies, by banks and by subsidiary companies (if their dominant company is obliged to prepare consolidated financial report in accordance with IFRS due to EU law). The main laws and regulations concerning corporate governance are: (i) CCC; (ii) IL; (iii) LC; (iv) CC; (v) AL; (vi) APO; (vii) ATFI; (viii) AIF. On 4 July 2007 a new version of best practices for listed companies (GP 2008, see also above) was enacted by WSE. GP is an act of soft law (non-binding law), but its execution is required by WSE with regard to all companies listed on WSE. Due to the Directive 2006/46/WE, there will be a requirement of informing in annual report whether a company acts in compliance with a corporate governance code and if so, which code is treated as binding. There is a relevant novel of AA planned, but at the moment no draft of such amendment is published. Under Polish law, there exist the following types of companies: (a) corporations (separate legal entities; the liability of their shareholders for company s debts is limited to the value of their contributions to the share capital). Within the - 7 -

8 No. Checklist Brief description (b) corporations, there are: (i) joint-stock company (based on German AG); minimum share capital is PLN 500,000 (approx. EUR 130,000), the only company that may become a listed company; (ii) limited liability company (based on German GmbH); minimum share capital is PLN 50,000 (approx. EUR 13,000); (iii) European company; partnerships (do not constitute separate legal entities but may make commitments, buy and sell property, sue and be sued; the partners liability for partnership s debts is secondary, but not limited to the value of their contributions; as a rule, no share capital is required). Within the partnerships, there are: (i) registered partnership a model partnership; (ii) professional partnership may be established and operated only by natural persons qualified in professions specified by the law; the default rule is that a partner is not subject to liability for company s debts assumed by another partner s actions (or by persons acting under another partner s supervision); (iii) limited partnership two types of partners exist: general partners, whose liability is unlimited, and limited partners, whose liability is limited to the amount specified in the articles of association; (iv) limited joint-stock partnership two types of partners exist: general partners (see above) and shareholders, whose rights and obligations are similar to those of joint-stock company; a minimum share capital of PLN 50,000 is required

9 No. Checklist Brief description 10. Are joint stock companies managed under a(n) [please briefly explain]: a.) Compulsory one-tier system (no supervisory board) No. b.) c.) Compulsory two tier-system (management board and supervisory board) Option to choose one-tier/two-tier system The two-tier system is compulsory for all joint stock companies governed by CCC. The European company (a European joint stock company governed primarily by Resolution 2157/2001/WE dated 8 October 2001 on the statute for European company - OJ L 294 of ) may choose between one-tier/two-tier systems

10 Principle I: Ensuring the basis for an effective corporate governance framework The corporate governance framework should promote transparent and efficient markets, be consistent with the rule of law and clearly articulate the division of responsibilities among different supervisory, regulatory and enforcement authorities. I.A. Corporate governance framework should be developed with a view to its impact on overall economic performance, market integrity, and the incentives it creates for market participants and promotion of transparent and effective markets. 11. a.) Does your country have a functioning stock exchange? [Please include the stock exchange website, if available.] b.) Are there different listing segments on the stock exchange? [If yes, please describe, focusing on corporate governance.] ATFI. WSE Are corporate bonds common in your country? AB. The bonds are rather common. The listing segments are created on the basis of resolution of WSE Board regardless of corporate governance issues. Capitalisation of the companies is taken into account. 13. Are Depositary Receipts (DRs) common in your country? Art. 3 No. 1 of the ATFI. The DR are rather common Does the country have a legislative or regulatory body in charge of assessing the implementation, reviewing and developing corporate governance laws? Are there effective, ongoing consultations between regulatory authorities, the public and corporations regarding the development of corporate governance laws? Is the Corporate governance issues are in Poland regulated in the acts of law, and in particular in the CCC. In addition to the acts of law, listed companies are subject to GP 2008 which is an act of soft law (non-binding law), but its execution is required by WSE. Art. 96 of the Polish Constitution adopting new laws is a task of the Parliament. Art. 7 of the AFMS PFSA is responsible for proposing new solutions and taking active part in implementation of new laws regarding financial markets (including corporate governance related). 29 of the WSE By-laws WSE also takes active part in the processes regarding corporate governance (GP 2008 as a result of its work). Capital market participants take part in consultations regarding the development of corporate governance laws (e.g. public consultations regarding GP).

11 decision-making process used in the development of those laws made publicly available? How transparent is the legal reform process? Does it allow all affected parties to fully understand the new laws and regulations? Can the securities market regulator intervene on behalf of shareholders in corporate disputes? Does commercial, corporate or securities arbitration exist? If yes, are arbitration decisions binding and final? Are state-owned companies subject to exactly the same corporate governance rules as other privately owned companies? Most of new legal projects are published by the relevant ministry and publicly available. The public hearing open to the interested parties are held and the opinions of lobbyists are published as well as the ministry s answers. Each project of a new statute is published together with its justification and brief explanation. Art. 6 of the AFMS. Art of the CPC, Art. 18 of the AFMS, 29 of the WSE Statutes. The arbitration decisions are binding and final, subject to the requirement of their approval by the common court in order to be enforceable. The reasons for court s refusal are limited to the list given in CPC. State-owned companies are subject to Ministry of Treasury Order on Ownership Supervision Principles dated 19 October 2005; due to that there are differences, mostly with respect to requirements for members of management boards and supervisory boards. I.B The legal and regulatory requirements that affect corporate governance practices in a jurisdiction should be consistent with the rule of law, transparent and enforceable. 20. Are the legal and regulatory requirements on corporate governance: a.) generally clear and well understood by economic participants? b.) sufficiently enforced in an efficient, consistent manner so as to constitute a transparent system? This is an open question. The answer is generally yes, however, it should be noted that in particular: a) as regards enforcement, delays in court proceedings can be a problem; b)some legal provisions on corporate governance remain open to different interpretations, including case law; c) GP 2008 are "soft-law", therefore it is not enforceable in court per se

12 a.) b.) c.) Do special court/sections exist in the judiciary for corporate cases? Is there a significant percentage of corporate governance law that has never been tested in court? Does a comprehensive case law collection exist so that interpretation of corporate governance legislation by courts is reasonably foreseeable? Do the laws usually specify sanctions and liabilities for breach of corporate governance laws and regulations? If yes, are the responsibilities and sanctions for breach of the law with reference to the following subjects, clearly defined: There are just commercial sections in courts dealing with all sorts of so called business matters. No data publicly available. We believe that there is a significant percentage of corporate governance law in some areas that has been tested in court, some of which has been tested in arbitrage proceedings. These regard rules related to labour law, environmental law and protection of minority shareholders. This is an open question. Either "yes" or "no" can be correct answers. We have decided to mark "yes" as the answer, subject to the following caveats: a) Polish corporate law had been non-existent for 50 years between 1939 and 1989 during the years of the II World War and communism. Following the introduction of the market economy in Poland, pre-war regulations were reinstated to some extent. Obviously, the above did not support the existence of a "comprehensive case-law collection"; b) the CCC has been in place as of 2001, to some extent it reinforced the previous regulations, on the other hand new regulations were introduced; c) as of 2004 Polish corporate law is following the acquis communautare (to a large extent already introduced by the CCC in 2001), which again, means adjusting the law now and then; d) within the above limits, a body of case law exists within selected areas of corporate law. In other areas, corporate law is subject to differing interpretations by legal commentators and the judiciary. Provisions of the CCC and CC may apply, however it must be always considered on the case-by-case basis. a.) management board Art. 479, 483 of the CCC, Art. 415 of the CC. 23. b.) supervisory board (if applicable) Art of the CCC. c.) corporate registry N/A. d.) corporate auditors Art. 482 of the CCC, Art. 415 of the CC. e.) corporate evaluators/assessors (e.g., in case of contribution in kind) Art. 481 of the CCC, Art. 415 of the CC

13 I.C. The division of responsibilities among different authorities in a jurisdiction should be clearly articulated and ensure that public interest is served Does the law designate a clear division of responsibilities between different authorities (e.g., banking regulator, securities market regulator, competition authority)? Is there an effective system of cooperation in place between regulators? Does the law address the issue of potential overlapping responsibilities or gaps in oversight between regulators? Are the key laws perfectly harmonised without major inconsistencies, conflicts and discrepancies? Supervision over securities market, banking system, insurances and pension funds has been recently consolidated and currently it is exercised by PFSA. Only the competition issues are supervised by AMO. Art. 1 of the AFMS responsibilities of PFSA. Art. 31 of the AL responsibilities of AMO Chairman. Art. 23 of the AFMS exchange of information between PFSA Chairman and AMO Chairman. N/A. N/A. I.D. Supervisory, regulatory, and enforcement authorities should have the authority, integrity and resources to fulfil their duties in a professional and objective manner. Moreover, their ruling should be timely, transparent, and fully explained. 28. Is the market regulator in charge of corporate governance? 29. Does the law assure the operational independence of the regulator from external political, commercial, or other interest interference when exercising its respective functions Corporate governance issues are in Poland regulated in the acts of law, and in particular in the CCC. In addition to the acts of law, listed companies are subject to GP2008 which is an act of soft law (non-binding law), but its execution is required by WSE. Art. 96 of the Polish Constitution adopting new laws is a task of the Parliament. Art. 7 of the AFMS PFSA is responsible for proposing new solutions and taking active part in implementation of new laws regarding financial markets (including corporate governance related). 29 of the WSE By-laws WSE also takes active part in the processes regarding corporate governance (GP2008 as a result of its work). The PFSA is supervised by the Prime Minister (Art. 3 of the AFMS); the Prime Minister appoints and dismisses the deputy chairmen of the PFSA (on a motion of the chairman), (Art. 9 of the AFMS); four of the seven members

14 and powers? Is the regulator accountable to the Parliament or any other government body on an ongoing basis? Is the budget of the regulator published and expenses transparently described? Does the law require that when developing new legislation, regulatory agencies should: a.) understand in advance the effects, costs and consequences of such new legislation (e.g., by implementing a Regulatory Impact Analysis - RIA)? b.) take into account the availability of resources for the implementation and enforcement of those laws? a.) Are the rulings of regulatory agencies documented and publicly available? of the PFSA are: the Minister of Labour, the Minister of Finance, the President of the National Bank of Poland (or his deputy) and a representative of the President of Poland (Art. 5 of the AFMS). Art. 3 Section 3 of the AFMS, Art. 4 Section 2 of the AFMS. The regulator reports yearly its expenses to the Prime Minister, who controls it. ASB. The planned budget of the regulator for each year is published as a part of State s budget in a form of legal statute. 1 of the CPL. The justification of the project should include description of its effect, costs and consequences. No standard form for analysis is required. 1 of the CPL. Art. 2 of the APNA. b.) If so, is that information easily accessible? Art. 12 of the APNA. After regulatory agencies render their decisions, must they also provide explanations for those decisions? Art. 107 of the APC

15 Principle II: The rights of shareholders The corporate governance framework should protect shareholders rights II.A. Basic shareholder rights include the right to: 1) secure methods of ownership registration; 2) convey or transfer shares; 3) obtain relevant information on the corporation on a timely and regular basis; 4) participate and vote in general shareholder meetings; 5) elect members of the board; and 6) share in the profits of the corporation. 35. Does the law require maintenance of a central or company share register where the shareholding of investors is recorded? (only with respect to registered shares) Art of the CCC. 36. Does the law require that the relevant share register be maintained by an external and independent organisation? Art of the CCC. 37. Under the law, does registration of shareholding in the central or company share register constitute proof of ownership? [If not, please explain what is the legal evidence of share ownership.] Art. 343 of the CCC the registration of shareholding in the share register is considered as a proof of ownership only with respect to internal relations between a shareholder and the company and only with respect to registered shares. With respect to relations between a shareholder and third persons, the document of share constitutes a proof of ownership. Art. 7 of the ATFI with respect to listed companies, the owner of the securities account on which the shares are written is deemed as an owner of the shares. 38. Under the law, can the parties (purchaser, seller or third parties) of shares require amendment of the register to record the change in shares' ownership? [Please explain.] Art. 341 of the CCC

16 a.) Does the law require that all the shares be fully paid before they can be transferred? b.) Are shares of listed/public companies freely transferable? c.) Can the free transferability of shares be restricted by specific provisions in company articles or by private contractual agreements? a.) Is the law providing shareholders the right to obtain information about the company at no costs and without undue delay? [If applicable, please state the time limit for providing information.] b.) Does the law provide for sanctions in case such information is not provided by the company in due time? Under the law, is the shareholders' meeting the only body authorised to: a.) b.) elect/appoint members of the board? [Please distinguish in case a two-tier system is in place.] dismiss members of the board? [Please distinguish in case there is a two-tier system in place.] Art , Art , Art of the CCC. Shares which are covered by cash contribution must be paid in 25% before they can be transferred. Shares which are covered by an in-kind contribution cannot be transferred until they are fully paid. Art of the CCC. Art of the CCC, Art. 338 of the CCC. c.) approve the company's audited annual report? Art (1) of the CCC. d.) approve dividends? Art of the CCC. Art , 3, 4 of the CCC. The right to obtain information by the shareholders can be generally executed at the general shareholders meeting. However, in justified cases (subject to the limitations following from Art of the CCC), the management board may provide shareholder with information outside of the shareholders meeting. N/A. Art of the CCC, Art , 2 of the CCC. Members of the management board are elected by the supervisory board, unless the statute provides otherwise. Members of the supervisory board are elected by the shareholder s meeting, unless the statute provides otherwise. Art of the CCC, Art , 2 of the CCC. Members of the management board are dismissed by the supervisory board, unless the statute provides otherwise. However, the shareholders meeting always has a right to dismiss a management board member. Members of the supervisory board are dismissed by the shareholder s meeting, unless the statute provides otherwise.

17 42. e.) decide on the time frame within which approved dividends are paid out? Are minority shareholders able to pool their votes for certain board candidates (for example, through cumulative voting)? Art , 3 of the CCC. Art. 385 of the CCC. Does the law give the shareholders' meeting the exclusive power to [Please specify if the power can be delegated to the board by the charter]: Art. 66 Section 4 of the AA the shareholders meeting is entitled to appoint auditor unless the shareholders meeting delegates this right to the supervisory board. Art of the CCC the register court appoints auditor to examine the report of the promoters of the company. Art of the CCC in case of increase of share capital the supervisory board is entitled to appoint auditor. On the basis of art of the CCC the management board approves the auditor s remuneration. 43. a.) appoint auditors; b.) approve the auditors' remuneration; c.) request additional information regarding the auditors' report? N/A. d.) approve remuneration of (supervisory/management) board members (state-owned companies) (other than state-owned companies) Art , Art , 2 of the CCC; Art. 6 ARP with respect to state-owned companies. In companies other than state-owned, the supervisory board approves the remuneration of the management board members. The remuneration of the supervisory board is approved by the shareholders meeting. 44. Does the law impose any conditions on a company to declare dividends? Art of the CCC. 45. Does the law require the distribution of dividends among holders of shares in proportion to their shareholding? General rule is that the distribution of dividends among holders of shares is done in proportion to their shareholding (Art of the CCC). However, the shares may be privileged as to the dividend according to Art and Art. 353 of the CCC. General rule is that the distribution of liquidated proceeds among holders of shares is done in proportion to their shareholding (Art of the CCC). However, the shares may be privileged as to the payment of the liquidation proceeds and then Art and 4 of the CCC applies. 46. Does the law require the distribution of liquidated proceeds among holders of shares in proportion to their shareholding?

18 II.B Shareholders have the right to participate in, and to be sufficiently informed on, decisions concerning fundamental corporate changes such as: 1) amendments to the statutes, or articles of incorporation or similar governing documents of the company; 2) the authorisation of additional shares; and 3) extraordinary transactions that in effect result in the sale of the company. 47. Does the law provide that shareholders should be notified of, and have the exclusive power to vote with respect to: [Please specify if the power can be delegated to the board by the charter.]: a.) amendments to the company charter? Art. 430 of the CCC. This power cannot be delegated. b.) issuance of additional shares? Art. 431, Art. 444, Art. 445 of the CCC. This power can be delegated. The statute may provide that the shareholders meeting may authorize the management board to increase the share capital within the limits of the authorised capital. Such resolution requires a majority of three fourths of the votes and the quorum of the shareholders representing at least half of the share capital (in the case of a public company, at least one third of the share capital). c.) merger, take-over or reorganisation of the company? Art , 2 of the CCC. This power cannot be delegated. d.) winding up or voluntary liquidation of the company? e.) waiver of pre-emptive rights (in the event of capital increase)? f.) the amendment of the specific rights attached to any class of shares? Does the law provide that existing shareholders have preemption 48. rights to subscribe to newly issued shares in proportion to their relevant shareholding? a.) Does the law allow exceptions/restrictions to these pre-emption rights described in Question 48 above? 49. b.) If yes, are these restrictions required to be approved on a case by case basis and by a super-majority vote of the shareholders (e.g. 75%)? 50. Can shareholders delegate to boards the issuance of capital up to an authorized limit and within a specified time-frame? Does the law enable a shareholder who voted against any of 51. the corporate changes in the company as referred to in Question 47 above to sell its shares to the company for not Art. 459 of the CCC. This power cannot be delegated. Art. 21 of the CCC the company may also be winded up by the court decision. Art of the CCC. This power cannot be delegated. Art of the CCC. This power cannot be delegated. Art of the CCC. Art of the CCC. Art of the CCC. Art of the CCC. Art of the CCC.

19 less than a price determined by an independent valuation entity (or the market)? II.C Shareholders should have the opportunity to participate effectively and vote in general shareholder meetings and should be informed of the rules, including voting procedures that govern general shareholder meetings Does the law require a shareholder meeting to be held annually, and within a specified time frame (e.g., 6 months) Art. 395 of the CCC. of the end of the company s fiscal year? Does the law empower the following people to request extraordinary shareholders' meetings: a.) the chairman of the board of directors; or N/A. b.) any member of the board of directors/supervisory N/A. board [Please specify]; or c.) one or more shareholders whose aggregate shareholding represents at least 10% of the Art. 400 of the CCC required shareholding 10%. Company s issued shares? [Please specify the required shareholding.] Does the law enable shareholders to participate in the shareholders' meeting not only in person, but also: a.) by post N/A. 54. b.) by voting instructions in writing or by substitutes other than directors on the basis of a power of attorney? If yes, should the power of attorney be notarised? 55. Does the law require that a shareholders' meeting be attended by a quorum of shareholders (presence quorum) representing an aggregate of at least 50% + 1 of the company s issued and outstanding common and preferred shares at the first call? [Please specify the quorum for the first, second and third call.] Art. 412 of the CCC the power of attorney must be in written form otherwise null and void, generally it does not require notarisation. Art. 408 of the CCC. Unless the law provides otherwise, the shareholders meeting can be convened irrespective of number of shares represented. The law requires a presence quorum for a shareholders' meeting be shares representing an aggregate of at least 50% + 1 of the company s issued and outstanding common and preferred shares at the first call only when

20 Does the law require the adoption of ordinary resolutions by an affirmative vote of a majority (of 50% + 1) of all of the company s issued and outstanding voting shares (decision quorum)? [Please specify the quorum for the first, second and third call.] authorizing the management board to increase the share capital within the limits of the authorised capital. Moreover, this is the only one instance when the law mentions quorum required for the second call, it being at least one third of the share capital of the company. According to Art. 414 of the CCC, resolution are to be adopted by majority of votes. Does the law require a super-majority vote of at least 75% of all the company s issued and outstanding voting shares regarding resolutions for the following matters: a.) b.) c.) d.) e.) any amendment to the company s charter [Please specify the quorum required at the second and third call.] any merger or reorganisation of the company [Please specify the quorum required at the second and third call.] the winding up or voluntary liquidation of the company [Please specify the quorum required at the second and third call.] a waiver of shareholders tender rights in case of voluntary redemption [Please specify the quorum required at the second and third call.]; and any single transaction or series of transactions involving at least 25% of the company's assets? [Please specify the quorum required at the second and third call.] (time limit) Art of the CCC. Art of the CCC, second call 33 % of share capital present. Only with respect to private companies. Art of the CCC with respect to private company. No second call option. Art of the CCC. No second call option. Art CCC 75 % votes required; 4 in case at least 50 % of the share capital is represented at the general shareholders meeting, absolute majority of votes cast required. No second call option. Art , 2 of the CCC the consent of the shareholders meeting is required only within 2 years of the company s registration. No second call option

21 In the case of any proposed restriction(s) on, or any amendment of, the specific rights attached to any class of shares, does the law require: a.) the 50 % + 1 presence quorum and Art of the CCC. There is no required quorum. 58. b.) a super-majority vote of at least 75% of the company's issued and outstanding voting shares within each such class of shares which may be affected by the proposed restriction or amendment? Is there a certain amount of time that must elapse between a first and second call? In cases where the rules relating to the holding of shareholders meetings have been violated, does the law provide for the right of shareholders to bring an action in order to set aside a shareholder's resolution? [If yes, please specify what is the percentage required for such action.] Art of the CCC. A resolution on amendments to the statutes, providing for an alteration of personal rights granted to individual shareholders requires the consent of all the shareholders concerned. N/A. Art of the CCC upon fulfilment of required criteria, any shareholder can bring action to set aside a shareholders resolution. II.C.1 Shareholders should be furnished with sufficient and timely information concerning the date, location and agenda of general meetings, as well as full and timely information regarding the issues to be decided at the meeting. a.) Does the law require that the company notify the shareholders of the agenda for a shareholders' meeting at least 20 calendar days in advance of the scheduled shareholders' meeting? 61. b.) Does the law allow that the notification of the general meeting be published in a newspaper or official gazette, without the need for individual notification to each shareholder? [If yes, please specify if it is required that the newspaper must have national distribution.] Does the law require a power of attorney proxy form to be 62. sent out at the same time when the notice convening the meeting is sent out? Art. 402 of the CCC. The shareholders should be notified at least three weeks in advance. Art. 402, Art. 5 3 of the CCC. It is required that the newspaper must have national distribution. N/A

22 63. In case of a proposed shareholders' meeting where any of the proposed resolutions require super-majority approval, does the law require that the company send a copy of the agenda, including any valuation reports and proposed resolutions and charter amendments to the shareholders? Art of the CCC, Art. 504 of the CCC, Art. 539 of the CCC. II.C.2. Opportunity should be provided for shareholders to ask questions to the board and to place items on the agenda at general meetings, subject to reasonable limitations. 64. Does the law require the agenda for a shareholders' meeting to be adopted by the board of directors? Art , Art of the CCC. Does the law provide for additional items to be added to the agenda at the request of: a.) the chairman of the board of directors; N/A. b.) any 2 directors; or N/A. c.) a.) b.) c.) any one or more shareholders whose aggregate shareholding represents at least 10% of the company s issued and outstanding shares? Does the law allow shareholders to submit questions in advance of a shareholders' meeting to which management and board members are required to reply at such shareholders' meeting? Does the law impose any penalties for not replying to such a shareholder request? Does the law allow shareholders to ask questions at the shareholder meeting? Art of the CCC. Management board is not required to reply to these questions at the shareholders meeting, unless the questions are raised at the shareholders meeting. N/A. Art of the CCC

23 II.D Capital structures and arrangements that enable certain shareholders to obtain a degree of control disproportionate to their equity ownership should be disclosed a.) Does the law regulate cross-shareholdings1? Art of the CCC. b.) a.) Is there a voting cap limiting the number of votes that a shareholder, who holds a cross-shareholding in another company, may exercise in dealings with that company (for example a voting cap of 10%)? [If so, please specify the voting cap.] Are there rules that govern the disclosure by shareholders of ultimate beneficial ownership? If yes, please specify the thresholds for disclosure of ownership. b.) Do ownership disclosure rules enable shareholders to obtain a clear picture of a company s ultimate ownership and the identity of intermediaries? Does the law impose restrictions on transactions involving shareholders with a conflict of interest regarding the transaction in order to avoid disadvantageous transaction terms for the company? Are shareholders required to disclose shareholder agreements to the company, the authorities and/or to other shareholders? (only listed companie s) Art of the CCC general prohibition on acquiring shares of a dominant company by its affiliates. Art. 69 of the APO shareholders must report increase or decrease of their engagement in the company. The thresholds are: 5 %, 10 %, 20 %, 25 %, 33 %, 50 %, and 75 %. In case shareholder owns shares representing at least 10% votes, they must report change of their engagement by 2% of votes. In case shareholder owns shares representing at least 33% votes, they must report change of their engagement by 1% of votes. The provisions of art. 69 of the APO and Art. 70 of the APO must be applied in connection with Art. 87 Section 1 of the APO and Art. 4 No. 14 of the APO. Company s ultimate ownership and the identity of intermediaries are not clearly disclosed. N/A. Art. 56, Art. 154 of the APO. Shareholders of listed companies is obliged just to inform the company about the shareholder agreement (not to disclose it) if it may be treated as confidential information or such information can have impact on the price of shares. 1 A cross-shareholding is where the company owns shares in another company which is also one of its own shareholders

24 II.E Changes of corporate control should be allowed to function in an efficient and transparent manner. II.E.1. The rules and procedures governing the acquisition of corporate control in the capital markets, and extraordinary transactions such as mergers and sales of substantial portions of corporate assets, should be clearly articulated and disclosed so that investors understand their rights and recourse. Transactions should occur at transparent prices and under fair conditions that protect the rights of all shareholders according to their class Does the law require notification to the company, the other shareholders, the securities commission, the stock exchange or anti-monopoly office if a shareholder builds up a significant shareholding in the company? [Please briefly describe how the law define significant shareholding.] Does the law impose any penalties for non-notification (e.g. a shareholder not being allowed to exercise the voting rights attached to the shares)? Are shareholders of the same class treated equally during changes of control? Is there a provision that minorities receive the same price as the controlling owner? Does the law include a provision allowing an offeror to require the holders of the remaining securities to sell their securities at a fair price (the so-called minority squeezed out)? If yes, please specify the shareholding threshold. Does the law include a provision allowing the holders of remaining securities to require the offeror to buy their securities at a fair price (the so-called minority buy-out)? Art. 6 1 of the CCC, Art. 69 of the APO. Neither CCC nor APO contains definition of significant shareholding, however it may be concluded that according to Art. 6 of the CCC, rights from 33% of shares, constitutes significant shareholding. With respect to listed companies, according to Art. 69 of the APO, it may be concluded that rights from 5% of shares constitutes significant shareholding. Art. 13 of the AL Notification to AMO is required in case of acquisition of shares resulting in taking control over the company, if the company s turnover exceeds EUR 1,000,000,000 worldwide or EUR 50,000,000 domestic. Art. 6 1 of the CCC, Art. 97 of the APO. Art. 20 of the CCC. There s no provision that minorities receive the same price as the controlling owner. Art. 418 of the CCC private joint-stock-companies threshold 95% of shares. Art. 82 of the APO listed joint-stock companies threshold 90 % of shares. Art of the CCC private joint-stock companies threshold no more than 5% of shares owned by a minor shareholder. Art. 83 of the APO listed joint-stock companies threshold 90% of shares owned by the major shareholder

25 II.E.2. Anti-takeover devices should not be used to shield management from accountability. 76. Does the law require an authorisation by a shareholders' resolution with a majority of 75% of the company's issued shares, before the board of directors is entitled to enter into any transaction other than for full and valid consideration as a measure to prevent a change of control in the company? N/A

26 Principle III: The equitable treatment of shareholders The corporate governance framework should ensure the equitable treatment of all shareholders, including minority and foreign shareholders. All shareholders should have the opportunity to obtain effective redress for violation of their rights. III.A. All shareholders of the same class should be treated equally. III.A.1 Within any class, all shareholders should have the same voting rights. All investors should be able to obtain information about the voting rights attached to all classes of shares before they purchase. Any changes in voting rights should be subject to shareholder vote. 77. Does the law require that within any class of shareholders all shareholders have the same voting rights? If yes, does the law implement the principle one share-one vote? Generally yes, subject to the comments below. Art. 351 of the CCC permits the issuance of privileged shares. Within each given class of shares (privileged, non-privileged), the shareholders would normally have the same voting rights. They might not have the same voting rights as regards shareholders from other classes. However, art. 354 of the CCC permits the granting of so-called "personal rights" to shareholders. These rights are personal to the shareholder in that they are not attached to the shares held by such shareholder. The "personal right" of a shareholder may consist, e.g. in having the right to nominate members of the management board or the supervisory board. In such a case, a shareholder having "personal rights" would formally have the same number of votes as other shareholders within the same class of shares, but materially would be able to have more influence on the company or have additional entitlements. The "one share-one vote" principle is not implemented in Poland on a general level. Art. 352 of the CCC provide that the maximum voting privilege attached to a share is two votes. However, as regards listed companies, the "one share-one vote" principle is implemented (Art of the CCC). A small number of listed companies may still exist with more than one vote attached to one share, if such voting privileges have been incorporated prior to the change in the law implementing the "one share-one vote" principle with regard to listed companies. 78. Does the law allow investors to have access to information about the voting rights attached to all classes of shares Art. 304, Art. 320 of the CCC, Art. 8, and Art. 8a of the ANCR.